Covid crash #2 started

DiggerUK

Any claims that Covid is the cause of, or will majorly contribute to an economic meltdown, is pure poppycock. The gorilla in the room was in residence long before anyone got sick.

The overhang from GFC1 never being sorted was clear to us all. This  palaver from government has all the hallmarks of being an excellent way to bury bad news....the simple fact that they had failed to overcome GFC1..._

ProDave

Sailtheworld said:

csgohan4 said:

ProDave said:

Prism said:

ProDave said:

The main thing that was making me nervous of a crash was the rising cases of Covid and lockdowns in the UK and Europe.  Another lockdown and business shut down again is not going to help the markets.

But I also saw some analysis of how the FTSE 100 was doing, you know where people draw lines on the chart and where the lines intersect tell you it is about to "break out" of it's current trend. That analysis basically said if it went below 6000 it would carry on falling, if it stopped short of 6000, it would turn upwards.

Now you can argue whether studying charts like that and drawing lines is an accurate way of predicting where it will go, but it had seemed as though it had taken the downward path.

Why are you nervous of a crash? You mentioned your pension fund in the first post so I assume this is a long term investment for you. If you are still accumulating a crash is a great thing as it means you buy cheaper for a while. If you are in drawdown then a crash isn't quite as beneficial but a well structured plan can cope with almost anything. There is nothing to worry about.

The money is in a SIPP which I anticipate to start drawing in just under 3 years.  It is only a small pot, and it's intended functions is to be drawn down in full by the time I reach state pension age in 10 years time.  I will be drawing my main DB pension in 3 years and this little SIPP pension will help to give some income until I reach SP age by which time I will be comfortable.

So the investment window left is short, and I don't want to end up in 3 years time with less than I started with.  So it is to be invested cautiously and that means trying to avoid anything that will make it crash.

with that short of a period I would consider converting some of your SIPP to bonds earlier, but everyone has different risk appetites

I'd missed that from Dave. He's currently 100% equities and needs to be spending some of the fund in 3 years time. No wonder he's nervous.

To get where he wants to go he shouldn't have started from here.

Indeed, but what are my options?

Leave it in cash and it will devalue by inflation?

It is already in what most consider a safe dependable low risk fund, but that is not immune from a crash.

I have asked before but nobody here wants to suggest what exactly to do with it.  It's in a HL SIPP and there does not seem to be a "2% per year savings account" option.  It's shares, bonds, funds or cash.

csgohan4

ProDave said:

Sailtheworld said:

csgohan4 said:

ProDave said:

Prism said:

ProDave said:

The main thing that was making me nervous of a crash was the rising cases of Covid and lockdowns in the UK and Europe.  Another lockdown and business shut down again is not going to help the markets.

But I also saw some analysis of how the FTSE 100 was doing, you know where people draw lines on the chart and where the lines intersect tell you it is about to "break out" of it's current trend. That analysis basically said if it went below 6000 it would carry on falling, if it stopped short of 6000, it would turn upwards.

Now you can argue whether studying charts like that and drawing lines is an accurate way of predicting where it will go, but it had seemed as though it had taken the downward path.

Why are you nervous of a crash? You mentioned your pension fund in the first post so I assume this is a long term investment for you. If you are still accumulating a crash is a great thing as it means you buy cheaper for a while. If you are in drawdown then a crash isn't quite as beneficial but a well structured plan can cope with almost anything. There is nothing to worry about.

The money is in a SIPP which I anticipate to start drawing in just under 3 years.  It is only a small pot, and it's intended functions is to be drawn down in full by the time I reach state pension age in 10 years time.  I will be drawing my main DB pension in 3 years and this little SIPP pension will help to give some income until I reach SP age by which time I will be comfortable.

So the investment window left is short, and I don't want to end up in 3 years time with less than I started with.  So it is to be invested cautiously and that means trying to avoid anything that will make it crash.

with that short of a period I would consider converting some of your SIPP to bonds earlier, but everyone has different risk appetites

I'd missed that from Dave. He's currently 100% equities and needs to be spending some of the fund in 3 years time. No wonder he's nervous.

To get where he wants to go he shouldn't have started from here.

Indeed, but what are my options?

Leave it in cash and it will devalue by inflation?

It is already in what most consider a safe dependable low risk fund, but that is not immune from a crash.

I have asked before but nobody here wants to suggest what exactly to do with it.  It's in a HL SIPP and there does not seem to be a "2% per year savings account" option.  It's shares, bonds, funds or cash.

sadly the time to do something about it was 2+ years ago, prior to draw down, one reduces their risk exposure by converting their equities to glits. You have not done so and due to current events are in a bad position. 

What was your investment strategy, why are you 100% equities 3 years from draw down, what were you hoping to achieve. If you were wanting more growth then sadly your gamble may not have completely paid off

NottinghamKnight

csgohan4 said:

ProDave said:

Sailtheworld said:

csgohan4 said:

ProDave said:

Prism said:

ProDave said:

The main thing that was making me nervous of a crash was the rising cases of Covid and lockdowns in the UK and Europe.  Another lockdown and business shut down again is not going to help the markets.

But I also saw some analysis of how the FTSE 100 was doing, you know where people draw lines on the chart and where the lines intersect tell you it is about to "break out" of it's current trend. That analysis basically said if it went below 6000 it would carry on falling, if it stopped short of 6000, it would turn upwards.

Now you can argue whether studying charts like that and drawing lines is an accurate way of predicting where it will go, but it had seemed as though it had taken the downward path.

Why are you nervous of a crash? You mentioned your pension fund in the first post so I assume this is a long term investment for you. If you are still accumulating a crash is a great thing as it means you buy cheaper for a while. If you are in drawdown then a crash isn't quite as beneficial but a well structured plan can cope with almost anything. There is nothing to worry about.

The money is in a SIPP which I anticipate to start drawing in just under 3 years.  It is only a small pot, and it's intended functions is to be drawn down in full by the time I reach state pension age in 10 years time.  I will be drawing my main DB pension in 3 years and this little SIPP pension will help to give some income until I reach SP age by which time I will be comfortable.

So the investment window left is short, and I don't want to end up in 3 years time with less than I started with.  So it is to be invested cautiously and that means trying to avoid anything that will make it crash.

with that short of a period I would consider converting some of your SIPP to bonds earlier, but everyone has different risk appetites

I'd missed that from Dave. He's currently 100% equities and needs to be spending some of the fund in 3 years time. No wonder he's nervous.

To get where he wants to go he shouldn't have started from here.

Indeed, but what are my options?

Leave it in cash and it will devalue by inflation?

It is already in what most consider a safe dependable low risk fund, but that is not immune from a crash.

I have asked before but nobody here wants to suggest what exactly to do with it.  It's in a HL SIPP and there does not seem to be a "2% per year savings account" option.  It's shares, bonds, funds or cash.

sadly the time to do something about it was 2+ years ago, prior to draw down, one reduces their risk exposure by converting their equities to glits. You have not done so and due to current events are in a bad position. 

What was your investment strategy, why are you 100% equities 3 years from draw down, what were you hoping to achieve. If you were wanting more growth then sadly your gamble may not have completely paid off

Well assuming a diversified portfolio the OP is far better off now than he would have been going all cash three years ago. If this is now too rich then adjust, I'm bond averse as things stand but moving into cash would be a short term solution at least.

Thrugelmir

NottinghamKnight said:

csgohan4 said:

ProDave said:

Sailtheworld said:

csgohan4 said:

ProDave said:

Prism said:

ProDave said:

The main thing that was making me nervous of a crash was the rising cases of Covid and lockdowns in the UK and Europe.  Another lockdown and business shut down again is not going to help the markets.

But I also saw some analysis of how the FTSE 100 was doing, you know where people draw lines on the chart and where the lines intersect tell you it is about to "break out" of it's current trend. That analysis basically said if it went below 6000 it would carry on falling, if it stopped short of 6000, it would turn upwards.

Now you can argue whether studying charts like that and drawing lines is an accurate way of predicting where it will go, but it had seemed as though it had taken the downward path.

Why are you nervous of a crash? You mentioned your pension fund in the first post so I assume this is a long term investment for you. If you are still accumulating a crash is a great thing as it means you buy cheaper for a while. If you are in drawdown then a crash isn't quite as beneficial but a well structured plan can cope with almost anything. There is nothing to worry about.

The money is in a SIPP which I anticipate to start drawing in just under 3 years.  It is only a small pot, and it's intended functions is to be drawn down in full by the time I reach state pension age in 10 years time.  I will be drawing my main DB pension in 3 years and this little SIPP pension will help to give some income until I reach SP age by which time I will be comfortable.

So the investment window left is short, and I don't want to end up in 3 years time with less than I started with.  So it is to be invested cautiously and that means trying to avoid anything that will make it crash.

with that short of a period I would consider converting some of your SIPP to bonds earlier, but everyone has different risk appetites

I'd missed that from Dave. He's currently 100% equities and needs to be spending some of the fund in 3 years time. No wonder he's nervous.

To get where he wants to go he shouldn't have started from here.

Indeed, but what are my options?

Leave it in cash and it will devalue by inflation?

It is already in what most consider a safe dependable low risk fund, but that is not immune from a crash.

I have asked before but nobody here wants to suggest what exactly to do with it.  It's in a HL SIPP and there does not seem to be a "2% per year savings account" option.  It's shares, bonds, funds or cash.

sadly the time to do something about it was 2+ years ago, prior to draw down, one reduces their risk exposure by converting their equities to glits. You have not done so and due to current events are in a bad position. 

What was your investment strategy, why are you 100% equities 3 years from draw down, what were you hoping to achieve. If you were wanting more growth then sadly your gamble may not have completely paid off

Well assuming a diversified portfolio the OP is far better off now than he would have been going all cash three years ago. If this is now too rich then adjust, I'm bond averse as things stand but moving into cash would be a short term solution at least.

Portfolios are often far less diversified than people assume. 

stephenadarglas

csgohan4 said:

Another national lockdown may reduce UK stocks/Overseas  further, the small gains back may go down again potentially.
The hospitality/tourism sector will be hit again

Temporarily of course

NottinghamKnight

Thrugelmir said:

NottinghamKnight said:

csgohan4 said:

ProDave said:

Sailtheworld said:

csgohan4 said:

ProDave said:

Prism said:

ProDave said:

The main thing that was making me nervous of a crash was the rising cases of Covid and lockdowns in the UK and Europe.  Another lockdown and business shut down again is not going to help the markets.

But I also saw some analysis of how the FTSE 100 was doing, you know where people draw lines on the chart and where the lines intersect tell you it is about to "break out" of it's current trend. That analysis basically said if it went below 6000 it would carry on falling, if it stopped short of 6000, it would turn upwards.

Now you can argue whether studying charts like that and drawing lines is an accurate way of predicting where it will go, but it had seemed as though it had taken the downward path.

Why are you nervous of a crash? You mentioned your pension fund in the first post so I assume this is a long term investment for you. If you are still accumulating a crash is a great thing as it means you buy cheaper for a while. If you are in drawdown then a crash isn't quite as beneficial but a well structured plan can cope with almost anything. There is nothing to worry about.

The money is in a SIPP which I anticipate to start drawing in just under 3 years.  It is only a small pot, and it's intended functions is to be drawn down in full by the time I reach state pension age in 10 years time.  I will be drawing my main DB pension in 3 years and this little SIPP pension will help to give some income until I reach SP age by which time I will be comfortable.

So the investment window left is short, and I don't want to end up in 3 years time with less than I started with.  So it is to be invested cautiously and that means trying to avoid anything that will make it crash.

with that short of a period I would consider converting some of your SIPP to bonds earlier, but everyone has different risk appetites

I'd missed that from Dave. He's currently 100% equities and needs to be spending some of the fund in 3 years time. No wonder he's nervous.

To get where he wants to go he shouldn't have started from here.

Indeed, but what are my options?

Leave it in cash and it will devalue by inflation?

It is already in what most consider a safe dependable low risk fund, but that is not immune from a crash.

I have asked before but nobody here wants to suggest what exactly to do with it.  It's in a HL SIPP and there does not seem to be a "2% per year savings account" option.  It's shares, bonds, funds or cash.

sadly the time to do something about it was 2+ years ago, prior to draw down, one reduces their risk exposure by converting their equities to glits. You have not done so and due to current events are in a bad position. 

What was your investment strategy, why are you 100% equities 3 years from draw down, what were you hoping to achieve. If you were wanting more growth then sadly your gamble may not have completely paid off

Well assuming a diversified portfolio the OP is far better off now than he would have been going all cash three years ago. If this is now too rich then adjust, I'm bond averse as things stand but moving into cash would be a short term solution at least.

Portfolios are often far less diversified than people assume. 

Yes, though my intent was that there were some scenarios which wouldn't have done well. A highly concentrated investment in us/ tech, which I assume you allude to, would have done far better.

DairyQueen

ProDave said:
Indeed, but what are my options?

Leave it in cash and it will devalue by inflation?

It is already in what most consider a safe dependable low risk fund, but that is not immune from a crash.

I have asked before but nobody here wants to suggest what exactly to do with it.  It's in a HL SIPP and there does not seem to be a "2% per year savings account" option.  It's shares, bonds, funds or cash.

We are in a similar situation. Full retirement is planned for next year and we intend front-loading drawdown from SIPPs.

I don't consider you in a 'bad position' but it sounds like you could benefit from a plan that suits your needs and risk profile.

Our strategy (one suggestion):

There is no risk-free investment option so we soon-to-be-retireds need a strategy that balances the risk of holding each asset type against the period within which we plan/need to drawdown.

A 'safe, dependable, low-risk fund' that is also 'not immune from a crash' is a paradox.

SIPPs now pay zero interest on cash - and historically SIPP cash returns have been pathetic. Cash (whether wrapped or unwrapped) is always exposed to inflation risk and, unlike equities, cash should therefore be viewed as a short-term investment. But cash is also the least risky way to hold funds intended to be spent within the next 5-8 years (timeframe depending on your need/risk profile).

For us, cash was the least worse asset type (there wasn't a 'good' option) for drawdown income required in 2-6 years. We wanted to make sure the funds were available when we planned to drawdown. Inflation is low, and likely to remain so in the short term, so cash will devalue less quickly - at least for a few years. Corporate bonds are behaving more like equities so too risky. Yields on good quality government bonds are -ve over several periods and there is no guarantee the price will increase to counter the -ve return. Equities are too volatile to be held as short-term investments.

Last year, against this backdrop, and with retirement 2-ish years away, I calculated the maximum amount that we were likely to drawdown within the first 5 years of retirement and rebalanced the portfolio over a period of several months to hold that amount in cash. I left it late but our circumstances prior to then were too fluid to plan in detail.

The pandemic hasn't changed my view of the current attributes of each asset type. If I was looking to rebalance as a pre-retirement exercise now I would do exactly the same. The safeguard against market volatility is to rebalance/de-risk over a period of months/years. The recommended timescale is 5 years but you (like us) don't have the luxury of time. 

Your asset allocation in the lead up to retirement will depend on your drawdown strategy. For example, you plan to front-load but could drawdown in the early retirement years be suspended if markets move against you? Do you want to take no/some risk on market timing?

We need to make use of tax thresholds before SP kicks-in (and OH is at risk of breaching the LTA at age 75) so, for us, deferring drawdown in the early years is a higher risk than inflation. Your situation will be different so devise a plan that suits your circumstances. Unlike over the decades of accumulation, the aim of which is not to maximise returns but to meet your personal objectives.

ProDave

As you say my plan for this SIPP is to front load it.  The entire SIPP will be drawn between age 60 and 67 to help fund that period of retirement.  My only income then will be my DB pension and I should be able to draw the SIPP slow enough to keep most of away from the tax man,  If I left any in the SIPP until after 67, then SP plus DB pension puts me above the basic rate tax threshold so all SIPP income after then would be taxed.

Cus

Have you looked at money market funds as an alternative to cash?